The Global Sustainable Competitiveness Index 2019

Governance
Table of
Contents
Governing National Development: Shaping Social and Economic
Capital
The base of the Sustainable Competitiveness Pyramid – the Natural Capital of a
country, is given. Everything else – the society, the economy - is shaped by the
legal, regulatory and physical (human built) framework. This framework – the
environment in which society exists and businesses operate - is developed,
maintained and updated by authorities and institutions, most often government
bodies. The Governance Sub-Index therefor encompasses all aspects that shape
the framework of society (the Social Capital), and in which the economy
(Intellectual Capital, Resource Management) operates. Key aspects of the
Governance aspects include:
• Strategic direction of government-led development (the balance
between the key elements of government spending: health, education,
infrastructure, security).
• The built physical environment (infrastructure) required for smooth
operation of the society and businesses, the availability and quality of
public services,
• The framework provided to businesses (formal in terms of business
regulations, and informal in terms of red tape and corruption negatively
affecting businesses),
• Exposure to volatility in terms of government balance sheets, and
exposure to volatility shocks as posed by financial market fluctuations.
Measuring Governance
Key elements of
competitiveness drivers in
the Governance Sub-Index
The result of qualitative governance quality & strategy evaluation depends very
much on the evaluator. The Sustainable Competitiveness Index therefore relies
on purely quantitative data series to exclude all subjectivity in evaluating and
calculating the Governance Sub-Index. In addition, some qualitative indicators
(perceived quality of public services and perceived levels of corruption
determined through reliable and international surveys) have been incorporated.
For the full list of indicators used, please refer to the methodology section.
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